TL;DR

A London Assembly report warns that energy-hungry data centres are contributing to housing delays by straining the electricity grid. The committee recommends a dedicated data centre policy and separate planning use class to address the growing infrastructure challenge.

Grid Capacity at a Crossroads

The rapid expansion of data centres across London has become a “contributing factor” to delays in building new housing, according to a report from the London Assembly Planning and Regeneration Committee. The findings highlight a growing tension between the UK’s digital infrastructure ambitions and its housing targets.

James Small-Edwards, the committee’s chair, stated that “London is at a critical moment, with energy capacity becoming a real constraint on both housing delivery and wider economic growth.”

The report documents how some new housing projects in west London were temporarily delayed when the electricity grid reached full capacity. The Greater London Authority investigated delays in the boroughs of Ealing, Hillingdon and Hounslow after completed projects were unable to secure grid connections.

Rising Power Demands

The energy challenge is set to intensify significantly. Data centres currently account for approximately 10 percent of the UK’s total electricity demand, but this figure is expected to rise by 200 to 600 percent between 2025 and 2050, according to the National Energy System Operator.

The explosion of generative AI services since late 2022 has accelerated demand, with AI training and inference workloads requiring substantially more power than traditional data centre operations.

Looking Forward

The committee has recommended that a dedicated data centre policy be included in the next London Plan, along with the introduction of a separate use class for data centres. These measures would enable better energy planning coordination across the city and help balance the competing demands of digital infrastructure and housing development.

For UK businesses, this development underscores the importance of factoring infrastructure constraints into location decisions—whether for data centre operations or office space requiring reliable power supplies.

Source: Silicon UK